TVIN » Topics » Section 3. Claims .

This excerpt taken from the TVIN 8-K filed Nov 1, 2006.

Section 3. Claims.

3.1 “Claim” Defined. As used herein, the term “Claim” means a claim for any Closing Payment Adjustment made by Buyer under Section 2.5 of the Purchase Agreement, and any claim for indemnification made by Buyer or by any other Indemnified Party related to Buyer under Article X of the Purchase Agreement.

3.2 When a Notice of Claim is Required. An officer of Buyer shall execute and deliver written notice of a Claim (a “Notice of Claim”) to the Selling Member Representative and the Escrow Agent as promptly as reasonably practicable, and in no event after the Release Date, upon: (i) Buyer’s discovery of any inaccuracy, misrepresentation or breach of or default by the Seller or any Member within the applicable provisions of the Purchase Agreement; or (ii) Buyer’s receipt of verbal or written notice of an order or proceeding filed by any third party against Buyer or any Indemnified Party related to Buyer that is based upon or includes assertions that would, if true, constitute an inaccuracy, misrepresentation, breach of or default by the Seller or any Member within the applicable provisions of the Purchase Agreement (a “Third Party Proceeding”).

3.3 Contents of Each Notice of Claim. Each Notice of Claim given by Buyer pursuant to Section 3.2 hereof shall be set forth in writing and shall include: (a) the amount of Damages that Buyer believes has actually been incurred by Buyer or any Indemnified Party related to Buyer in connection with the Claim; and (b) Buyer’s good faith estimate of the reasonably foreseeable maximum amount of the alleged Damages that will ultimately be incurred by Buyer and/or any Indemnified Party related to Buyer in connection with such Claim, including without limitation any Damages from a potential Third Party Proceeding.

3.4 Requirement of Resolution of Claims. Except as provided in Section 2.4(b) hereof, the Escrow Agent shall not act regarding any of the Escrow Fund held pursuant to a Notice of Claim until such Notice of Claim has been resolved in accordance with Section 4 hereof and, in the case of a Contested Claim, it receives appropriate notice pursuant to Section 4.3 hereof.

Section 4. Resolution of Claims. Any Notice of Claim received by the Selling Member Representative and the Escrow Agent pursuant to Section 3 hereof shall be resolved as follows:

4.1 Third Party Proceedings. The provisions of Article X of the Purchase Agreement shall govern the procedures to be followed by Buyer and the Selling Member Representative regarding Third Party Proceedings.

4.2 Uncontested Claims. If, within thirty (30) calendar days after the Selling Member Representative receives a Notice of Claim, the Selling Member Representative does not contest such Notice of Claim (an “Uncontested Claim”) in a written notice delivered to the Escrow Agent pursuant to Section 4.3 hereof, then the Escrow Agent shall: (a) immediately charge and allocate that portion of the Escrow Fund required to satisfy the amount of Damages specified in such Notice of Claim; (b) update its books and records with respect to the Escrow Fund (the “Escrow Ledger”) to reflect the effect of the application of Escrow Fund; and (c) notify the Selling Member Representative in writing of the application of Escrow Fund as promptly as reasonably practicable.

 

ESCROW AGREEMENT

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4.3 Contested Claims. If Buyer and the Escrow Agent receive a written notice from the Selling Member Representative contesting all, or a portion of, a Notice of Claim within the thirty (30) day period described in Section 4.2 hereof (a “Contested Claim”), then Buyer and the Selling Member Representative will work together in good faith to resolve their dispute for up to thirty (30) days. If the Selling Member Representative and Buyer should so agree, they shall execute a written settlement agreement complying with Section 4.6 hereof.

4.4 Multiplicity of Claims Permitted. The assertion of any single Claim for indemnification hereunder shall not bar Buyer or any Indemnified Party related to Buyer from asserting any other Claims hereunder.

4.5 Notice of Resolution of Claim. The Escrow Agent shall not deliver the Escrow Fund held pursuant to a Contested Claim until the Escrow Agent receives appropriate notice. Such notice must consist of delivery to the Escrow Agent of either: (a) written notice of the resolution of such Claim executed by both the Selling Member Representative and Buyer; (b) a written settlement agreement pursuant to Section 4.6 hereof; or (c) an appropriate final non-appealable order by a court of competent jurisdiction. The Escrow Agent shall be entitled to rely on any such notice, settlement agreement or order and make distributions in accordance with the terms thereof.

4.6 Settled Claims. If a Claim is resolved in a manner set forth in Section 4.3, then the Selling Member Representative and Buyer shall promptly deliver to the Escrow Agent written instructions on the appropriate charges or adjustments to be made to the Escrow Ledger, and the Escrow Agent shall, subject to Section 4.2 hereof, then: (a) immediately charge and allocate that portion of the Escrow Fund as required in connection with such settlement; (b) update the Escrow Ledger to reflect the effect of the application of Escrow Fund; and (c) notify the Selling Member Representative in writing of the application of Escrow Fund as promptly as reasonably practicable.

4.7 No Election of Remedies. Buyer shall institute Claims against the Escrow Fund and exhaust such Escrow Fund prior to proceeding against the Seller or the Members under the Purchase Agreement and, in satisfaction thereof, may elect to have such Escrow Fund deducted from the Escrow Ledger, after complying with the terms of the Purchase Agreement and this Agreement. The assertion of any single Claim hereunder will not bar Buyer from asserting other Claims hereunder or under the Purchase Agreement.

This excerpt taken from the TVIN 8-K filed Nov 14, 2005.

Section 3. Claims.

 

3.1. “Claim” Defined. As used herein, the term “Claim” means a claim for any Closing Payment Adjustment made by Parent under Section 1.6 of the Merger Agreement, and any claim for indemnification made by Parent or by any other Indemnified Party related to Parent under Articles VII and VII of the Merger Agreement.

 

3.2. Notice of Claim.

 

(a) When a Notice of Claim is Required. An officer of Parent shall execute and deliver written notice of a Claim (a “Notice of Claim”) to the Stockholder Representative and the Escrow Agent as promptly as reasonably practicable, and in no event after the Final Release Date, upon: (i) Parent’s discovery of any inaccuracy, misrepresentation or breach of or default by any of the parties constituting the Escrow Depositors within the applicable provisions of the Merger Agreement; or (ii) Parent’s receipt of verbal or written notice of an order or proceeding brought by any third party against Parent or any Indemnified Party related to Parent that is based upon or includes assertions that would, if true, constitute an inaccuracy, misrepresentation, breach of or default by any of the parties constituting the Escrow Depositors within the applicable provisions of the Merger Agreement (a “Third Party Proceeding”).

 

(b) Failure to Provide Notice of Claim. Failure to provide such notice in a timely manner shall not reduce Parent’s rights hereunder or the obligations of the Escrow Depositors in this Agreement and under the Merger Agreement, unless the failure to provide such notice materially impairs the Escrow Depositors’ ability to defend the Claim, and then only to the extent of such impairment.

 

ESCROW AGREEMENT

 

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3.3. Contents of Each Notice of Claim. Each Notice of Claim given by Parent pursuant to Section 3.2 hereof shall be set forth in writing and shall include: (i) the amount of Damages that Parent believes has actually been incurred by Parent or any Indemnified Party related to Parent in connection with the Claim; and (ii) Parent’s good faith estimate of the reasonably foreseeable maximum amount of the alleged Damages that will ultimately be incurred by Parent and/or any Indemnified Party related to Parent in connection with such Claim, including without limitation any Damages from a potential Third Party Proceeding.

 

3.4. Requirement of Resolution of Claims. Except as provided in Section 2.4(b) hereof, the Escrow Agent shall not act regarding any of the Escrow Shares held pursuant to a Notice of Claim until such Notice of Claim has been resolved in accordance with Article 4 hereof and, in the case of a Contested Claim, it receives appropriate notice pursuant to Section 4.3 hereof.

 

Section 4. Resolution of Claims. Any Notice of Claim received by the Stockholder Representative and the Escrow Agent pursuant to Article 3 hereof shall be resolved as follows:

 

4.1. Third Party Proceedings. The provisions of Articles VII and VIII of the Merger Agreement shall govern the procedures regarding Third Party Claims.

 

4.2. Uncontested Claims. If, within thirty (30) calendar days after the Stockholder Representative receives a Notice of Claim, the Stockholder Representative does not contest such Notice of Claim (an “Uncontested Claim”) in a written notice delivered to the Escrow Agent pursuant to Section 4.3 hereof, then the Escrow Agent shall: (a) immediately charge and allocate the number of Escrow Shares (determined in accordance with Section 4.7 hereof) required to satisfy the amount of Damages specified in such Notice of Claim; (b) update the Escrow Ledger to reflect the effect of the application of Escrow Shares; and (c) notify the Stockholder Representative in writing of the application of Escrow Shares as promptly as reasonably practicable. Notwithstanding anything herein to the contrary, in accordance with Section 7.3(e) of the Merger Agreement, the Stockholder Representative may elect to satisfy any indemnification obligation under this Agreement by directly paying to Parent any amount due hereunder (rather than utilizing cash or Parent Shares then held by the Escrow Agent).

 

4.3. Contested Claims. If Parent and the Escrow Agent receive a written notice from the Stockholder Representative contesting all, or a portion of, a Notice of Claim within the thirty (30) day period described in Section 4.2 hereof (a “Contested Claim”), then the parties will work together in good faith to resolve their dispute for up to thirty (30) days. If the Stockholder Representative and Parent should so agree, they shall execute a written settlement agreement complying with Section 4.6 hereof.

 

4.4. Multiplicity of Claims Permitted. The assertion of any single Claim for indemnification hereunder shall not bar Parent or any Indemnified Party related to Parent from asserting any other Claims hereunder.

 

4.5. Notice of Resolution of Claim. The Escrow Agent shall not deliver Escrow Shares held pursuant to a Contested Claim until the Escrow Agent receives appropriate notice. Such notice must consist of: (i) written notice of the resolution of such Claim executed by both the Stockholder Representative and Parent; (ii) a written settlement agreement pursuant to

 

ESCROW AGREEMENT

 

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Section 4.7 hereof; (iii) delivery to the Escrow Agent of an appropriate final non-appealable order by a court of competent jurisdiction; or (iv) delivery to the Escrow Agent of a copy of the final order of an arbitrator or court. The Escrow Agent shall be entitled to rely on any such settlement agreement and make distributions in accordance with the terms thereof.

 

4.6. Settled Claims. If a Claim (including a Contested Claim) is settled by a written settlement agreement executed by the Stockholder and Parent, then the Stockholder Representative and Parent shall promptly deliver such written settlement agreement to the Escrow Agent with written instructions on the appropriate charges or adjustments to be made to the Escrow Ledger, and the Escrow Agent shall, subject to Section 4.2 hereof, then: (a) immediately charge and allocate the number of Escrow Shares (determined in accordance with Section 4.7 hereof) as required in connection with such settlement; (b) update the Escrow Ledger to reflect the effect of the application of Escrow Shares; and (c) notify the Stockholder Representative in writing of the application of Escrow Shares as promptly as reasonably practicable.

 

4.7. Determination of Number of Escrow Shares for Claims. Subject to Section 4.5 of this Agreement, any amount owed to Parent under this Agreement will be determined as follows: unless a specific number of Escrow Shares is specified, the number of Escrow Shares to be delivered to Parent in connection with any Claim will be determined by deducting from the Escrow Shares account in the Escrow Ledger the number of Escrow Shares equal to: (a) the amount of Damages for that Claim, divided by, (b) the average closing price of a share of Parent Shares on the Nasdaq Capital Market for the twenty (20) trading days immediately preceding the date of the Notice of Claim delivered by Parent to the Stockholder Representative.

 

4.8. No Election of Remedies. Parent shall institute Claims against the Escrow Shares and exhaust such Escrow Shares prior to proceeding against the Company Stockholders and in satisfaction thereof may elect to have such Escrow Shares deducted from the Escrow Ledger, after any notice to the Stockholder Representative required hereunder, without making any other claims directly against the Escrow Depositors and without rescinding or attempting to rescind the transactions consummated pursuant to the Merger Agreement. The assertion of any single Claim hereunder will not bar Parent from asserting other Claims hereunder or under the Merger Agreement. Parent shall not be required to exhaust any other remedies that may be available but may proceed directly in accordance with the provisions of this Agreement.

 

EXCERPTS ON THIS PAGE:

8-K
Nov 1, 2006
8-K
Nov 14, 2005

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